Tausch - comments on Arrighi's Long Century

Fri, 4 Apr 1997 16:52:14 +0200 (MET DST)

Arrighi's text is sheer delight for any world system scholar. I'd like to
comment on some of the points made by him, making use of my 'Transnational
Integration' piece:
Arrighi wrote in (1995):
'Partial as the current revival of a self-regulating world market has actually
been, it has already issued unbearable verdicts. Entire communities, countries,
even continents, as in the case of sub-Saharan Africa, have been declared
'redundant', superfluous to the changing economy of capital accumulation on a
world scale. Combined with the collapse of the world power and territorial
empire of the USSR, the unplugging of these 'redundant' communities and locales
from the world supply system has triggered innumerable, mostly violent feuds
over 'who is more superfluous than whom', or, more simply, over the
appropriation of resources that were made absolutely scarce by the unplugging'
(Arrighi, 1995: 330)
On the other hand, it is clear that nations like
Cyprus, South Korea, Singapore, Antigua, Thailand, Malaysia, Mauritius,
Botswana, Saint Vincent, Suriname, Turkey, Indonesia, China, the Solomon
Islands, Pakistan, India, Bhutan, and Chad
had a GNP growth rate of 5% or more per annum during 1980-93. What tendencies,
then, do emerge from the multivariate analysis of international development in
the post-1980/1989 world in 134 countries with fairly consistent and complete
First, we mention our database:

Final model: the database

% labor force participation ratio (UNDP, 1996)
% of the labour force in agriculture (UNDP, 1996; Fischer Weltalmanach, 1996)
% of the labour force in industry (see: labour force agriculture)
absolute GNP (UNDP, 1996)
agricultural share in GDP (UNDP, 1996; Fischer Weltalmanach, 1996)
average population growth (UNDP, 1996)
economic growth 80-93, p.c. and year (UNDP, 1996)
EU membership years (Fischer Weltalmanach, 1995, 1996)
FDI per GDP (UNCTAD, 1996; Business Central Europe, 1996)
human development index (UNDP)
inflation 93 (UNDP, 1996)
main telephone lines per 100 population (UNDP, 1996)
mean years of schooling, population aged >25y
military expenditures per GDP (UNDP, 1996)
state sector size (government expenditures per GDP; UNDP 1996; Weltalmanach,
1995, 1996; World Resources Institute)
structural heterogeneity (labour force share in agriculture divided by product
share of agriculture; see labour force data)
total fertility rate (UNDP, 1996)
UN membership years (Weltalmanach, 1996, 1995)
violation of political rights (1, democracy, to 7, dictatorship) (Stiftung
Entwicklung und Frieden, 1996, based on Freedom House)
violations of civil rights (see political rights)
years of communist rule (Autorenkollektiv; Weltalmanach)

The variables of the final model:

absolute GNP

growth 80-93

inflation 93


UN membership years

mean years of schooling

absolute GNP


Years of Communist Rule

population growth

state sector size

% labor force participation

% labour force agric.

% lf industry

agr. share in GNP



violation of political rights

violation of human rights

Is Arrighi's hypothesis about the 'deregulatory logic' of post-1980 capitalism
confirmed by the data? Under inclusion of the world of former 'real' socialism,
the curve-linear effect of the development level on subsequent economic growth
is partially taken over by variables, pertaining to the employment structure.
Again, only the statistically significant effects, that cannot be explained by
simple random, are being taken into account. Countries with a large labour force
participation ratio, and hence, a relatively smaller industrial de-facto reserve
army of employment, grow slower than countries at the middle income level with a
still larger industrial reserve army outside agriculture and a relatively
abundant supply of labour on the labour market. Our results from Chapter 4 about
the (female) reserve army are again confirmed here, now on a more general level.
One plausible reason for this shift in predictive power away from the Matthew's
effect to the employment structure is the still preliminary character of income
data from Eastern Europe. Wage flexibility in the urban sector seems to be
another of the main underlying processes here. But on the other hand,
predominantly rural societies at the present stage of globalization are being
negatively affected by the ongoing urban bias in world development (M. Lipton).
Above, we already drew attention to the fact of the structural development blocs
in Europe. Seen from the perspective of Third World development, it is amazing
to see how some European countries repeat the experience of what Armando Cordova
once called 'structural heterogeneity' and what development sociologists today
also call - somewhat differently from Michael Lipton - structural
disarticulation. In terms of measurement, it boils down to the same effect:
disarticulation, urban bias, structural heterogeneity - they all happen,
whenever agriculture has a much larger share in national labour than in national
product, reflecting the relative discrimination of the rural sector in society.
The world map of structural disarticulation looks like the following:
Map 9.1: The urban bias of world development

Some of the most surprising data from this comparison about the urban bias are:
Austria 4.0
Brazil 2.09
Germany 4.0
India 2.06
Israel 1.33
Japan 3.5
NL 1.25
New Zealand 1.11
Poland 4.5
UK 1.0
USA 2.14
Legend: employment share of agriculture, divided by product share of
agriculture. For the ongoing debate about this 'urban bias', 'structural
heterogeneity' or 'disarticulation' see Huang, 1995; Rothgeb, 1995, Wickrama and
Mulford, 1996, as well as the earlier theoretical advances by Amin, 1976;
Cordova, 1973, and Lipton, 1977. Our data analysis is based on EXCEL 7 and UNDP,
Hence also the negative effect of agricultural employment on growth. The
international system indeed seems to work like a single, huge, distribution
coalition. Economic growth disproportionately favours countries with a
long-established record of UN-membership. Participation in the distribution
coalition allows for a better access to the distributed goods, while the
predominantly rural societies of the 'Fourth' and 'Fifth' World are being
excluded from the benefits.
The human capital effort indeed pays off in terms of economic growth, and also
state sector size affects growth in a way, as predicted by conventional economic
theory. The size of the military sector significantly and negative affects
economic growth. Again, our results from Chapter 4 are confirmed here.
Former communist countries often stagnate, because their human capital effort is
too low, because their state is still too big, because their wage flexibility is
too low, because their military burden rate is still too high, and because their
rural populations are being discriminated against. But per se, the tendencies of
world society after 1980 during the new cyclical set-up seem to suggest, that a
world political experience as a former communist nation does not block against
subsequent economic growth. Also, the argument, that smaller nations with a low
absolute GNP find it more difficult in world society, does not apply anymore,
when we look into the whole set of determining conditions for 134 capitalist and
post-communist societies in the world. By contrast: absolute market size is not
a precondition of subsequent economic growth anymore, as successful island
nations like Mauritius, show impressively. Our equation determines 46.6% of
economic growth from 1980 onwards; the F-statistic for the whole equation is
8.05, with 120 degrees of freedom.
Human development, on the other hand, is positively determined by a high
agricultural share, and hence the absence of what Michael Lipton once called the
'urban bias of world development'. It is also being negatively determined by a
high ratio of foreign direct investment penetration. Thus, recent findings of
cross-national development research, most notably Huang (1995) are being
confirmed anew. Our two statements are very well compatible with the essence of
dependency theories. A development, that is dependent to a large extent on
foreign capital, is socially polarising and regionally exclusive. The rural
regions stagnate relatively, while the rich urban centres are receiving
disproportionate shares of the newly created wealth. But ceteris paribus, it
also emerges, that the human capital formation effort (mean years of schooling)
is negatively related to the human development index, mainly because highly
repressive totalitarian communist regimes - in the past - had a relatively good
quantitative record in the education sector, that was connected with severe
deficits in other areas of social policy.




UN memb.y
mean y scho
Years of Comm
population gr
state sector
%labor force
%lf agric.
%lf industry


UN memb.y
mean y scho
Years of Comm
population gr
state sector
%labor force
%lf agric.
%lf industry




UN memb.y
mean y scho
Years of Comm
population gr
state sector
%labor force
%lf agric.
%lf industry

mean y scho
Years of Comm
population gr
state sector
viol hum rites
%lf agric.
%lf industry



mean y scho
Years of Comm
population gr
state sector
viol hum rites
%lf agric.
%lf industry

Source: our EXCEL 5.0 calculations from UNDP and other data sources, quoted
above. As to the footnotes about the outprints, see Chapter 4.
In terms of employment policy and labour force participation rates, Europe is
not in a very lucky constellation right now: low population growth, a strong
urban bias, high overall educational levels, combined with a high employment
share of industry and a run-down of military expenditures all would suggest a
still future lowering of the labour force participation rates, while in some
European countries there is still a high agricultural employment share, which
works as an additional constraint against a higher labour force participation

Transnational integration and national disintegration - a synthesis

So, again, what has been Osvaldo Sunkel's prediction more than 25 years ago? We
have stated above, that Sunkel's main hypothesis consisted in saying:
'...The advancement of modernization introduces, so to speak, a wedge along the
area dividing the integrated from the segregated segments (...) The effects of
the disintegration of each social class has important consequences for social
mobility. The marginalized entrepreneur will probably add to the ranks of small
or artesanal manufacture, or will abandon independent activity and become a
middle class employee. The marginalized sectors of the middle class will
probably form a group of frustrated lower middle class people trying to maintain
middle class appearance without much possibility of upward mobility and
terrorized by the danger of proletarization. The marginalized workers will
surely add to the ranks of absolute marginality, where, as in the lower middle
class, growing pools of resentment and frustration of considerable demographic
dimension will accumulate (...) Finally, it is very probable that an
international mobility will correspond to the internal mobility, particularly
between the internationalized sectors (...) The process of social disintegration
which has been outlined here probably also affects the social institutions which
provide the bases of the different social groups and through which they express
themselves. Similar tendencies to the ones described for the global society are,
therefore, probably also to be found within the state, church, armed forces,
political parties with a relatively wide popular base, the universities etc.'
(Sunkel, 1972: 18-42).
Income distribution data show, that large areas of the world are dominated by
medium to high inequality, and that inequality decreased in some countries, but
increased in others - especially in the former socialist countries after the
transformation, and in industrialized nations themselves. So, 25 years after
Sunkel's essay, parts of the periphery might be underway towards a partial
redistribution and a partial re-integration of their marginal sectors, while
polarization increases in the centres. This generalized hypothesis is also
supported by our analysis of employment data, which, limited as they are, show,
that while the South made at least some headway, the 'North' (and that, as
usual, includes the very 'down under South' of Australia, New Zealand, and
partially also Argentina, as correctly predicted by Wheelwright and his school a
quarter of a century) has declined.
Map 10.1: income inequality in the world system

Legend: EXCEL 7.0 graph from World Bank WDR 1996 data (Table 5) and Moaddel,
Map 10.2: capitalism and inequality growth/decline in the world system

Legend: income distribution changes as measured by the 10 year standardized
growth/decline in the share of the top 20% in total incomes. Calculated from
World Bank, WDR, 1996 and Moaddel, 1994, using EXCEL 7.0
Map 10.3 unemployment in the world system

Legend: EXCEL 7.0 maps from ILO World Labour Report and UNDP Human Development
Report data. Data for Eastern Europe were supplemented by CSO (Central
Statistical Office Warsaw) Poland Quarterly Statistics, IV, 3, Dec. 1996
This partial re-peripherization of the 'North' and 'far South' of the world
system is accompanied by growing instances of how globalization in the economic
sphere leads in these former zones of prosperity towards partial increases in
human rights violations and more exclusive patterns of government. The
'Southernization' of the 'North' in the economic sphere is partially accompanied
by 'southernization' in the political sphere. Suffice to say here, that in
Europe we experienced the largest civil rights violations since the Second World
War, and that unemployment in Germany now reaches almost Weimar proportions.
Map 10.4: human rights violations in the world system

Legend: our own compilations from Freedom House Sources/Stiftung Entwicklung und
Frieden, 1996, and EXCEL 7.0 map system

Map 10.5: international narcotics control priority areas

Source: EXCEL 7.0 map on the basis of US Department of State (1996),
'International Narcotics Control Strategy Report', March
Europe thus faces three very important decisions about the future: east-ward
expansion of the European Union, European monetary union, and the structural
internal reform of the Union. Faced with these decisions, an intellectual battle
rages across the continent between euro-sceptics and integrationists, between
federalists and nationalists, between centralists and regionalists. World
systems research and development research provides radical, fascinating and
novel answers to these old controversies.
What is the evidence of cross-national quantitative research?
(i) The process of globalization did not level-off the differences in wealth and
well-being between the different regions of the world, especially between Europe
and the Mediterranean southern periphery of Europe. Far from granting a real
free trade regime, Europe has petrified existing patterns of the division of
labour between the centres and the peripheries. Poverty, unemployment,
homelessness and other negative social phenomena become more and more relevant,
not just for periphery and semi-periphery countries, but for the former centres
in Europe themselves. We are evidencing a peripherization of the European
landmass, while the countries of the Western Pacific and the Eastern Indian
Ocean are the future centres of world capitalist development.
(ii) Europe is characterized by the very mix of conditions, which, on a
world-wide scale, block against rapid economic growth. Too little national
savings, privileged home-markets for idle and saturated European transnational
corporations and the European continental powerful banks, migration instead of
innovation, excessive government consumption, political distribution coalitions
- also regarding gender conflict lines - which try to get via political means
what they cannot achieve on the world markets anymore, the continued practising
of traditional patterns of national defence, based on conscription, are
precisely the mix that explains 44.2% of stagnation from 1980 world-wide,
without resorting to capital investments and other intra-economic explanations
of growth. The 134 nation study on growth in world society, mentioned above,
again underlines these points. What would be the answer against this process
what in the Dutch languages has been so aptly termed as Verluderung?
A slim, socially just state, which enhances savings, deters distribution
coalitions, subjects the European transnationals to the discipline of the
market, instead of pouring down the sink billions of ECU's in terms of
subvention money, ending up more often than not in the pockets of the shadow
economists of our times, would be among the pre-requisites of a real reform of
the European Union member states and an adequate answer to the question about
the place of Europe in the world. 15 of the most important 19 development
dimensions in the world system are being negatively determined nowadays by MNC
penetration. The capitalist world economy is in addition characterized by strong
20 year cycles (Kuznets cycles) and 50-60 year longer waves (Kondratieff waves),
which again are shown to be relevant in this work on the basis of new
calculations, based on Joshua Goldstein's previous research. They, and not so
much grand designs of conference diplomacy, will determine the future place of
Europe in the world economy. Precisely, because the Union is presently a
protective club shielding away market influences from European transnationals,
banks, and distribution coalitionists, Europe's upswing is belated, and the
Maastricht-induced stagflation threatening to coincide with the next major
Kuznets cycle trough, to be expected in 2002 or 2003, will make our stagnation
even worse. Political stability, under such circumstances, in the Mediterranean
and in other countries becomes a question mark. European foreign policy, blinded
by the fall of the Berlin Wall in 1989, overlooks the intrinsic conflict
structure of the world economy, that is shaped like a 'W' and that threatens
future intensified conflicts on the borderlines of world instability.
(iii) Subventions, mass migration and distribution coalitions mean structural
conservation and environmental decay at the same time. Since environmental
strain cycles coincide with world economic swings, it is to be expected that any
real future European recovery will increase the environmental problems on the
European continent, still increased by the transport-intensity of EU-development
patterns, connected with the subvention system. Physical mobility of labour is
the key de-facto concept of the past policies of the Commission in Brussels,
while information mobility is being hindered by local and national telephone
monopolies, and the absence of privatisation in transport, especially roads.
(iv) The eastward expansion of the Union will have to face up to the dilemmas of
modernization in the environment of past rapid urbanisation (what world system
scholars have termed the urban bias in world development), little efficient
state-directed mass communication and belated demographic transitions in much of
the Balkans and the former Soviet Union, if not the former Warsaw Pact in
general. Modernization and structural adjustment in the post-1989 set-up is
bound to fail in the East if it is not accompanied by a massive real inflow of
foreign resources. The semi-democratization in much of the region, that set in
after 1989, from the viewpoint of political stability, is much more dangerous
than the full rule dictatorship or full democracy. Money laundering and
fluctuations in the terms of trade are additional important determinants of the
growth prospects of the reform countries.
(v) Modernization, globalization, and East-ward expansion of the Union might
increase existing cleavages in the countries of the East, if they are not
accompanied by a deep structural change in favour of the up to now
underprivileged sectors and strata. Many of the lessons of neo-classical
economists about Southeast-Asia can be repeated here in an East European
context. The discrimination against exports by import substitution strategies,
effective currency overvaluations, privileges and wage inflexibility in the
monopolistic sectors, and finally and overarching all these phenomena, a
conspicuous contempt of urban elites against the countryside and a deep urban
bias of development have created a structure, where the political and social
divisions between the different parts of countries have increased. It is shown
in this study with regional multivariate analyses from Polish election data 1993
and 1995, that electoral results are heavily determined by these regional and
world economic aspects, while other theories fail to capture the dynamics of
socio-political cleavages in the new democracies of the East.
(vi) Euro-sclerosis at the heart of the Union of presently 15 nations is a
reality. Take any indicator of economic illness in the relatively stable Western
democracies today - unemployment, lack of economic growth, insufficient human
development: it will be neatly determined by just three variables:
- age of democracy within world politically guaranteed boundaries
- size of the state sector, like central government expenditures per GDP
- years of membership in the European Union
Instead of causing stable long-term economic growth, the Union rather causes
what might be termed 'the Belgium syndrome'. Relatively young democracies, like
Poland or the Czech Republic, Hungary or Slovenia, will still benefit for a few
years from the positive effects of early membership; but the positive initial
effects will disappear with the workings of the really existing Union in the
long run.
So, what then is the prescription? For Arrighi (1995), there seems to emerge the
imperative of organizing the international community anew around the dynamic
axis of the East Asian/North American archipelago, implicitly hoping for
democratization spin-offs along this dynamic axis. The Japanese trasnational
bank and the Japanese transnational corporation overseas seem to be the most
dynamic element of world capitalism nowadays. Arrighi seems to advance the
viewpoint that such a 'world community' controlled capitalism would still be
better than the rule of chaos and war. For us, Europeans, the lectures of the
empirical study of contemporary changes in world capitalism are twofold: one is
more medium-term, the other long-term: the upgrading of the European Parliament
('no taxation without representation'), a more slender and socially just state
in the member countries, free trade, again and again, and also more decisive
efforts in human capital formation (in the framework of privatisation of
Universities and other institutions of higher learning) would be a proper
European step in the right direction in the short-and medium term. To learn form
the East Asian Space-of Flows (Arrighi, 1995) above all suggests that heeding
the advice of contemporary economics, learning its lessons from East Asia in
such areas as corporate strategy, labour market organization, international
trade and migration, would be more advantageous than to be trapped again by the
fatal conceit of a thinking along the lines of the territorial control, the
Lebensraum. And Germany, in particular, at the decisive time, seems to forget
that the main imperatives of world system ascent are economic and not
territorial - now in the wider, European Union sense. Such advice unheeded,
eastward European Union expansion could dismally fail, made all the worse by the
negative effects of ongoing Maastricht austerity. Thus the time is ripe for a
socio-liberal alternative to orthodox etatism and neo-conservatism alike.
On a long-term basis, though, only a socio-liberal world state will be able to
overcome the intrinsic instabilities of the capitalist nation system, that has
(un)governed the world since 1450. Today's problems are too global to be left to
a (supra)national state. And at any rate, transnational capitalism rings the
bell to all attempts at national regulation for the next 50 or 100 years. So,
our predictions for Europe are dire: Sunkel's scenario, at least in part, offers
a key to our future. Capitalist globalization can only be answered by global
democratisation strategy.